U.S. freedom of navigation (FON) operations have recently come under scrutiny with assertions near contested features in the South China Sea. While some question whether they are necessary, there are strong legal and practical imperatives supporting their conduct. FON operations help to ensure that the hard-earned compromises reached during the Third United Nations Conference on the Law of the Sea (1973-1982) are maintained both by word and deed. The Vienna Convention on the Law of Treaties states that “subsequent practice” shall be taken into account in interpreting treaties. If the United States fails to consistently assert is maritime rights under international law, these might be lost over time. Moreover, as a practical matter, rights not used are of little real value.

FON operations are part of the broader U.S. FON Program, which proceeds on a triple track. Criticism that the United States is prioritizing physical assertions over diplomatic and multilateral efforts is unwarranted. An examination of U.S. responses to three types of excessive maritime claims that are particularly problematic in the region—the insistence on prior authorization or notification for warships to exercise innocent passage, the prohibition of military activities in the EEZ, and the drawing of straight baselines when geographic conditions for doing so are not satisfied—demonstrates that the United States has been meticulous in diplomatically protesting excessive maritime claims and in setting out its (and the majority) interpretation of international law. FON operations assert rights available to all user states and cannot validly be described as a “use of force” or even “militarization”. Rather, such assertions are legitimate exercises of rights vested under international law.

In the South China Sea, FON operations have taken on additional significance given China’s strategic ambiguity. In the past, FON operations were undertaken to challenge excessive maritime claims. They are now, however, arguably being conducted to pre-empt them—a course of action necessitated by China’s continued refusal to clarify its claims. Such operations may, accordingly, be better framed as assertions of maritime rights (so that these rights are reinforced and not detracted from in the future), rather than as challenges to excessive maritime claims. This recasting is particularly appropriate in the Spratlys where China has been especially vague about its maritime claims.

Effectively employed, FON operations could help counter China’s attempts to assert de facto control over the South China Sea. They will also raise the costs of Beijing declaring straight baselines around the Spratlys and attempting to convert the waters within these lines to internal waters.

The widely anticipated tribunal decision in the Philippines case against China will facilitate the planning, execution and messaging of FON operations by clarifying the status of features. Insofar as the conduct of FON operations is consistent with the tribunal’s award, it will bolster the United States’ ability to argue that its actions are in accordance with international law. Regular assertions of maritime rights in respect of features that are the subject of the tribunal’s decision will give the award teeth and render it more difficult for China to ignore the ruling.

The South China Sea dispute is about much more than mere “rocks”. It concerns maritime rights and the preservation of the system of international law. More broadly, how the United States and China interact in the South China Sea has important implications for their relationship elsewhere and on other issues.

This paper recommends that the United States consider the following:

1. Continue to regularly assert maritime rights in the South China Sea, including in the Spratlys

2. Clearly put on record the maritime right the United States is asserting at the time of a FON operation

3. Publish a consolidated list of all diplomatic protests made in respect of excessive maritime claims

Downloads

Authors

U.S. freedom of navigation (FON) operations have recently come under scrutiny with assertions near contested features in the South China Sea. While some question whether they are necessary, there are strong legal and practical imperatives supporting their conduct. FON operations help to ensure that the hard-earned compromises reached during the Third United Nations Conference on the Law of the Sea (1973-1982) are maintained both by word and deed. The Vienna Convention on the Law of Treaties states that “subsequent practice” shall be taken into account in interpreting treaties. If the United States fails to consistently assert is maritime rights under international law, these might be lost over time. Moreover, as a practical matter, rights not used are of little real value.

FON operations are part of the broader U.S. FON Program, which proceeds on a triple track. Criticism that the United States is prioritizing physical assertions over diplomatic and multilateral efforts is unwarranted. An examination of U.S. responses to three types of excessive maritime claims that are particularly problematic in the region—the insistence on prior authorization or notification for warships to exercise innocent passage, the prohibition of military activities in the EEZ, and the drawing of straight baselines when geographic conditions for doing so are not satisfied—demonstrates that the United States has been meticulous in diplomatically protesting excessive maritime claims and in setting out its (and the majority) interpretation of international law. FON operations assert rights available to all user states and cannot validly be described as a “use of force” or even “militarization”. Rather, such assertions are legitimate exercises of rights vested under international law.

In the South China Sea, FON operations have taken on additional significance given China’s strategic ambiguity. In the past, FON operations were undertaken to challenge excessive maritime claims. They are now, however, arguably being conducted to pre-empt them—a course of action necessitated by China’s continued refusal to clarify its claims. Such operations may, accordingly, be better framed as assertions of maritime rights (so that these rights are reinforced and not detracted from in the future), rather than as challenges to excessive maritime claims. This recasting is particularly appropriate in the Spratlys where China has been especially vague about its maritime claims.

Effectively employed, FON operations could help counter China’s attempts to assert de facto control over the South China Sea. They will also raise the costs of Beijing declaring straight baselines around the Spratlys and attempting to convert the waters within these lines to internal waters.

The widely anticipated tribunal decision in the Philippines case against China will facilitate the planning, execution and messaging of FON operations by clarifying the status of features. Insofar as the conduct of FON operations is consistent with the tribunal’s award, it will bolster the United States’ ability to argue that its actions are in accordance with international law. Regular assertions of maritime rights in respect of features that are the subject of the tribunal’s decision will give the award teeth and render it more difficult for China to ignore the ruling.

The South China Sea dispute is about much more than mere “rocks”. It concerns maritime rights and the preservation of the system of international law. More broadly, how the United States and China interact in the South China Sea has important implications for their relationship elsewhere and on other issues.

This paper recommends that the United States consider the following:

1. Continue to regularly assert maritime rights in the South China Sea, including in the Spratlys

2. Clearly put on record the maritime right the United States is asserting at the time of a FON operation

3. Publish a consolidated list of all diplomatic protests made in respect of excessive maritime claims

Downloads

Authors

]]>
http://www.brookings.edu/research/papers/2016/05/06-limits-of-law-south-china-sea-gewirtz?rssid=east+asia+policy+papers{C5C88B4B-C901-4BD9-92B3-8B638C5D9C69}http://webfeeds.brookings.edu/~/153160694/0/brookingsrss/series/eastasiapolicypapers~Limits-of-law-in-the-South-China-SeaLimits of law in the South China Sea

The vast South China Sea has become one of the world’s most dangerous hotspots. Through words and deeds, six claimants including China contend for control over numerous small land features and resource-rich waters, with the United States also heavily involved because of alliances and our own security and economic interests. The great geopolitical question of our age, whether the United States as the established dominant superpower can co-exist with a re-emerging powerful China, sits on the sea’s horizon like a huge and taunting Cheshire Cat.

China, Taiwan, the Philippines, Vietnam, Brunei, and Malaysia all claim sovereignty over some of these land features and waters, and the claims conflict. China, through its “nine-dash line” map and many statements, has claimed at the very least sovereignty over all the islands and rocks in the South China Sea and rights over the adjacent waters. China has also boldly undertaken “land reclamations” that build on land features, turning claims into physical structures and threatening further militarization. The other five stakeholders have conflicting claims over land features that in turn produce numerous additional overlapping and conflicting claims over adjacent waters and how they are used. Neither the vastness of the sea nor the smallness of the disputed land specks has prevented an escalation in intensity in recent years. Concerns about security and resources have driven much of the tension, and rival nationalisms in stakeholder countries breathe fire on the waters.

The risk that accidents or small conflicts will lead to dangerous escalations is constant. But there is not yet a path ahead for resolving the many disputes and controlling the serious risks they pose. However, the United States has articulated an approach. We have stated that we do not take a position on the competing sovereignty claims but we have called for a law-based and rules-based resolution of the competing claims. As President Obama has recently said, the United States is committed to “a regional order where international rules and norms—and the rights of all nations, large and small—are upheld. [Disputes] between claimants in the region must be resolved peacefully, through legal means, such as the upcoming arbitration ruling under the U.N. Convention on the Law of the Seas, which the parties are obligated to respect and abide by.”

This statement invokes one of the hallmark ideas of President Obama’s foreign policy: International issues should be resolved in a rules-based way through the rule of law. Law-based approaches indeed have many advantages: They are peaceful, offer the promise of fair and impartial application of rules, and can protect the weak as well as the strong. In addition, through application of law, legal tribunals can also provide solutions to issues that are otherwise unavailable because of political stalemate elsewhere.

The point of this essay is both simple and regretful: Although a rules-based and law-based approach in the international arena is an admirable aspiration, law will not solve the dangerous problems in the South China Sea. More specifically, the upcoming ruling in the case brought by the Philippines against China before an arbitration tribunal under the U.N. Convention the Law of the Seas will not solve the problems or even make a major headway in resolving them. An examination of the issues before the tribunal and its most likely decisions demonstrate that the tribunal and law can make only a very limited contribution to resolving the South China Sea crisis. Law will not save us from continuing to focus predominantly on negotiations and power politics.

Downloads

Authors

The vast South China Sea has become one of the world’s most dangerous hotspots. Through words and deeds, six claimants including China contend for control over numerous small land features and resource-rich waters, with the United States also heavily involved because of alliances and our own security and economic interests. The great geopolitical question of our age, whether the United States as the established dominant superpower can co-exist with a re-emerging powerful China, sits on the sea’s horizon like a huge and taunting Cheshire Cat.

China, Taiwan, the Philippines, Vietnam, Brunei, and Malaysia all claim sovereignty over some of these land features and waters, and the claims conflict. China, through its “nine-dash line” map and many statements, has claimed at the very least sovereignty over all the islands and rocks in the South China Sea and rights over the adjacent waters. China has also boldly undertaken “land reclamations” that build on land features, turning claims into physical structures and threatening further militarization. The other five stakeholders have conflicting claims over land features that in turn produce numerous additional overlapping and conflicting claims over adjacent waters and how they are used. Neither the vastness of the sea nor the smallness of the disputed land specks has prevented an escalation in intensity in recent years. Concerns about security and resources have driven much of the tension, and rival nationalisms in stakeholder countries breathe fire on the waters.

The risk that accidents or small conflicts will lead to dangerous escalations is constant. But there is not yet a path ahead for resolving the many disputes and controlling the serious risks they pose. However, the United States has articulated an approach. We have stated that we do not take a position on the competing sovereignty claims but we have called for a law-based and rules-based resolution of the competing claims. As President Obama has recently said, the United States is committed to “a regional order where international rules and norms—and the rights of all nations, large and small—are upheld. [Disputes] between claimants in the region must be resolved peacefully, through legal means, such as the upcoming arbitration ruling under the U.N. Convention on the Law of the Seas, which the parties are obligated to respect and abide by.”

This statement invokes one of the hallmark ideas of President Obama’s foreign policy: International issues should be resolved in a rules-based way through the rule of law. Law-based approaches indeed have many advantages: They are peaceful, offer the promise of fair and impartial application of rules, and can protect the weak as well as the strong. In addition, through application of law, legal tribunals can also provide solutions to issues that are otherwise unavailable because of political stalemate elsewhere.

The point of this essay is both simple and regretful: Although a rules-based and law-based approach in the international arena is an admirable aspiration, law will not solve the dangerous problems in the South China Sea. More specifically, the upcoming ruling in the case brought by the Philippines against China before an arbitration tribunal under the U.N. Convention the Law of the Seas will not solve the problems or even make a major headway in resolving them. An examination of the issues before the tribunal and its most likely decisions demonstrate that the tribunal and law can make only a very limited contribution to resolving the South China Sea crisis. Law will not save us from continuing to focus predominantly on negotiations and power politics.

Downloads

Authors

]]>
http://www.brookings.edu/research/papers/2015/12/thailand-burma-drugs-wildlife-felbabbrown?rssid=east+asia+policy+papers{78B40989-26D8-488F-9BBD-EC860177178B}http://webfeeds.brookings.edu/~/150168367/0/brookingsrss/series/eastasiapolicypapers~Enabling-war-and-peace-Drugs-logs-gems-and-wildlife-in-Thailand-and-BurmaEnabling war and peace: Drugs, logs, gems, and wildlife in Thailand and Burma

In this policy paper, Vanda Felbab-Brown explores the relationship between conflict, peace dynamics, and drugs and other illicit economies in Thailand and Myanmar/Burma since the 1960s through the current period. In both cases, drugs and other illicit economies fueled insurgencies and ethnic separatism. Yet both Myanmar and Thailand are in different ways (controversial) exemplars of how to suppress conflict in the context of the drugs-conflict nexus. They both show that the central premise of the narcoinsurgency/narcoterrorism conventional approach–in order to defeat militants, bankrupt them by destroying the illicit drug economy on which they rely–was ineffective and counterproductive. At the same time, however, in both Thailand and Myanmar, recent anti-drug policies have either generated new hidden violent social conflict or threaten to unravel the fragile ethnic peace. The leading research finding and policy implications are: While illicit economies fuel conflict, their suppression is often counterproductive for ending conflict and can provoke new forms of conflict. Prioritization and sequencing of government efforts to end conflict and reduce illicit economies is crucial. So is recognizing that suppressing poppy at the cost of exacerbating logging or wildlife trafficking is not an adequate policy outcome.

Learning the right lessons is acutely important for Burma/Myanmar, which, after the overwhelming victory of the National League for Democracy (NLD), led by Aung Sang Suu Kyi in the November 2015 elections, is entering a new political order and a new phase in peace negotiations with ethnic separatist groups. Although the Myanmar military will not give up its influence on the ethnic peace processes, Aung San Suu Kyi and the NLD will become far more involved in the negotations, having drawn important support from the contested ethnic areas allowed to participate in the election. At the same time, the NLD and Suu Kyi (whatever her formal title in the new government will be) will need to carefully structure and calibrate their relationships with external donors and trading partners, such as China and the United States, many of which will seek to shape policies toward drugs and other extractive and illegal economies, including logging, mining, and wildlife trafficking.

Key Findings

Thailand has become a paragon of how to implement alternative livelihoods to wean local populations off of cultivating illicit crops. Yet the strategy’s success was critically enabled by Thailand’s suspension of the eradication of illicit crops while the ethnic insurgency among the poppy-cultivating ethnic minorities was underway. Suspending eradication and thus being able to win the population’s allegiance was crucial. But well-designed, alternative livelihoods only became effective long after violent conflict had ended.

Recently, however, Thailand’s drug policies have been the source of a new kind of violent conflict: In early 2003, Prime Minister Thaksin Shinawatra launched a zero-tolerance “war on drugs.” In addition to many arrested, an estimated 3,000 people were killed during the “war.” A new phase of the war is currently underway, resulting in the arrest of almost 285,000 people in 2015 alone. As before, this war on drugs is counterproductive when it comes to addressing the threats and harms posed by drug use and the drug trade. It also violates human rights. It should not be seen by either Thai society or the international community as legitimizing the military junta that seized power in 2014.

Burma is yet another case where laissez-faire policies toward illicit economies were central to the government’s ability to reduce and suspend military conflict. However, the policies adopted in Burma provide a new twist on laissez-faire: in that it was not used by the government to win the hearts and minds of the population, but rather to buy off and co-opt the belligerents and the traffickers themselves. Indeed the centerpiece of the ceasefires of the early 1990s was the junta’s acquiescence to the belligerents’ continued trade with any of the goods in their territories – including drugs, minerals, timber, and wildlife.

Renegotiating the ethnic ceasefires of the 1990s into permanent negotiated settlements is one of the essential determinants of whether lasting peace is established and Myanmar’s transition from authoritarianism succeeds. Yet it is not clear whether the economic inducements à la the 1990s can any longer be available. First, the international oversight, including China’s, is far more determined to not allow the perpetuation of illicit economies in Myanmar, such as a resurrected poppy economy. Second, many more actors, including Bamar groups and Chinese enterprises, are now intermeshed in a variety of Myanmar’s economies, including illegal logging and land seizure, squeezing out ethnic participants. For many reasons, beyond but including the management of illicit economies and economic interests, some of the peace negotiations are breaking down, and violent conflicts are restarting. At the same time, many of the economies which have underpinned peace and sometimes replaced the opium poppy economies – including logging, mining, and wildlife trafficking – have had devastating environmental effects.

Key Policy Recommendations

Contrary to the conventional wisdom, suppressing labor-intensive illicit economies does not relieve military conflict, it exacerbates it. Accordingly, the opposite sequencing and prioritization of policy is often required:

• In order to end insurgencies, whether through a victory on the battlefield, by weaning local populations from supporting belligerent groups, or through peace deals that give insurgent groups an economic stake in the peace, governments may have temporarily to tolerate labor-intensive illicit economies, such as drug cultivation.

• However, for such a peace to be both sustainable and satisfactory from a public goods perspective, the social and economic development of former conflict areas will be necessary to prevent undesirable unregulated and illegal economies, such as logging and wildlife trafficking.

• Conversely, for alternative livelihoods programs to be effective in reducing such undesirable economies in a lasting way, good security needs to be established in the rural regions. This means that the ending of military conflict needs to be given priority.

• Alternative livelihoods must address all the structural drivers of illicit economies. They must encompass generation of sufficient employment opportunities, such as through the promotion of high-value high-labor-intensive crops as well as through off-farm income, infrastructure building, distribution of new technologies, marketing help and the development of value-added chains, facilitation of local microcredit, establishment of access to land without the need to participate in the illicit economy, and development of off-farm income opportunities-- to name a few of the most prominent components. A combination of purposeful village-level rural development and broad job-generating economic development is necessary.

• They also need to be integrated into overall development strategies, with attention paid to whether overall economic growth produces job creation or capital accumulation while exacerbating inequality. Macroeconomic policies, such as fiscal policies that tax labor heavily and land lightly, might have pronounced, if indirect, effects on the effectiveness of alternative livelihoods policies, and may be expressions of persisting social exclusion.

• Policing and rule of law are indispensable elements of suppressing illegal economies and regulating the legal ones so they are not socially or environmentally destructive. However, for policing and law enforcement to be effective, they often require that local populations do not fundamentally see them as contrary to their human security and hence can be internalized. Thus, providing desirable legal economic alternatives facilitates policing and rule of law.

• However, alternative livelihoods strategies must become far more sensitive to their environmental impacts. Underpinning a peace deal with unrestrained destruction of forests produces at best a highly problematic reduction in conflict. Replacing the drug trade with wildlife trafficking is equally not a good deal. Both can turn an unstable peace into unrestrained plunder.

• Policies addressing drug use should not become new forms of war. Mass incarceration of users and low-level, non-violent pushers does little to suppress—and can exacerbate—the use of illicit drugs. Stigmatizing and punishing users undermines efforts to stem the spread of HIV/AIDS and other communicable diseases. Public health approaches, such as needle-exchanges and safe-injection sites, produce far better policy outcomes and should be adopted.

Downloads

Authors

In this policy paper, Vanda Felbab-Brown explores the relationship between conflict, peace dynamics, and drugs and other illicit economies in Thailand and Myanmar/Burma since the 1960s through the current period. In both cases, drugs and other illicit economies fueled insurgencies and ethnic separatism. Yet both Myanmar and Thailand are in different ways (controversial) exemplars of how to suppress conflict in the context of the drugs-conflict nexus. They both show that the central premise of the narcoinsurgency/narcoterrorism conventional approach–in order to defeat militants, bankrupt them by destroying the illicit drug economy on which they rely–was ineffective and counterproductive. At the same time, however, in both Thailand and Myanmar, recent anti-drug policies have either generated new hidden violent social conflict or threaten to unravel the fragile ethnic peace. The leading research finding and policy implications are: While illicit economies fuel conflict, their suppression is often counterproductive for ending conflict and can provoke new forms of conflict. Prioritization and sequencing of government efforts to end conflict and reduce illicit economies is crucial. So is recognizing that suppressing poppy at the cost of exacerbating logging or wildlife trafficking is not an adequate policy outcome.

Learning the right lessons is acutely important for Burma/Myanmar, which, after the overwhelming victory of the National League for Democracy (NLD), led by Aung Sang Suu Kyi in the November 2015 elections, is entering a new political order and a new phase in peace negotiations with ethnic separatist groups. Although the Myanmar military will not give up its influence on the ethnic peace processes, Aung San Suu Kyi and the NLD will become far more involved in the negotations, having drawn important support from the contested ethnic areas allowed to participate in the election. At the same time, the NLD and Suu Kyi (whatever her formal title in the new government will be) will need to carefully structure and calibrate their relationships with external donors and trading partners, such as China and the United States, many of which will seek to shape policies toward drugs and other extractive and illegal economies, including logging, mining, and wildlife trafficking.

Key Findings

Thailand has become a paragon of how to implement alternative livelihoods to wean local populations off of cultivating illicit crops. Yet the strategy’s success was critically enabled by Thailand’s suspension of the eradication of illicit crops while the ethnic insurgency among the poppy-cultivating ethnic minorities was underway. Suspending eradication and thus being able to win the population’s allegiance was crucial. But well-designed, alternative livelihoods only became effective long after violent conflict had ended.

Recently, however, Thailand’s drug policies have been the source of a new kind of violent conflict: In early 2003, Prime Minister Thaksin Shinawatra launched a zero-tolerance “war on drugs.” In addition to many arrested, an estimated 3,000 people were killed during the “war.” A new phase of the war is currently underway, resulting in the arrest of almost 285,000 people in 2015 alone. As before, this war on drugs is counterproductive when it comes to addressing the threats and harms posed by drug use and the drug trade. It also violates human rights. It should not be seen by either Thai society or the international community as legitimizing the military junta that seized power in 2014.

Burma is yet another case where laissez-faire policies toward illicit economies were central to the government’s ability to reduce and suspend military conflict. However, the policies adopted in Burma provide a new twist on laissez-faire: in that it was not used by the government to win the hearts and minds of the population, but rather to buy off and co-opt the belligerents and the traffickers themselves. Indeed the centerpiece of the ceasefires of the early 1990s was the junta’s acquiescence to the belligerents’ continued trade with any of the goods in their territories – including drugs, minerals, timber, and wildlife.

Renegotiating the ethnic ceasefires of the 1990s into permanent negotiated settlements is one of the essential determinants of whether lasting peace is established and Myanmar’s transition from authoritarianism succeeds. Yet it is not clear whether the economic inducements à la the 1990s can any longer be available. First, the international oversight, including China’s, is far more determined to not allow the perpetuation of illicit economies in Myanmar, such as a resurrected poppy economy. Second, many more actors, including Bamar groups and Chinese enterprises, are now intermeshed in a variety of Myanmar’s economies, including illegal logging and land seizure, squeezing out ethnic participants. For many reasons, beyond but including the management of illicit economies and economic interests, some of the peace negotiations are breaking down, and violent conflicts are restarting. At the same time, many of the economies which have underpinned peace and sometimes replaced the opium poppy economies – including logging, mining, and wildlife trafficking – have had devastating environmental effects.

Key Policy Recommendations

Contrary to the conventional wisdom, suppressing labor-intensive illicit economies does not relieve military conflict, it exacerbates it. Accordingly, the opposite sequencing and prioritization of policy is often required:

• In order to end insurgencies, whether through a victory on the battlefield, by weaning local populations from supporting belligerent groups, or through peace deals that give insurgent groups an economic stake in the peace, governments may have temporarily to tolerate labor-intensive illicit economies, such as drug cultivation.

• However, for such a peace to be both sustainable and satisfactory from a public goods perspective, the social and economic development of former conflict areas will be necessary to prevent undesirable unregulated and illegal economies, such as logging and wildlife trafficking.

• Conversely, for alternative livelihoods programs to be effective in reducing such undesirable economies in a lasting way, good security needs to be established in the rural regions. This means that the ending of military conflict needs to be given priority.

• Alternative livelihoods must address all the structural drivers of illicit economies. They must encompass generation of sufficient employment opportunities, such as through the promotion of high-value high-labor-intensive crops as well as through off-farm income, infrastructure building, distribution of new technologies, marketing help and the development of value-added chains, facilitation of local microcredit, establishment of access to land without the need to participate in the illicit economy, and development of off-farm income opportunities-- to name a few of the most prominent components. A combination of purposeful village-level rural development and broad job-generating economic development is necessary.

• They also need to be integrated into overall development strategies, with attention paid to whether overall economic growth produces job creation or capital accumulation while exacerbating inequality. Macroeconomic policies, such as fiscal policies that tax labor heavily and land lightly, might have pronounced, if indirect, effects on the effectiveness of alternative livelihoods policies, and may be expressions of persisting social exclusion.

• Policing and rule of law are indispensable elements of suppressing illegal economies and regulating the legal ones so they are not socially or environmentally destructive. However, for policing and law enforcement to be effective, they often require that local populations do not fundamentally see them as contrary to their human security and hence can be internalized. Thus, providing desirable legal economic alternatives facilitates policing and rule of law.

• However, alternative livelihoods strategies must become far more sensitive to their environmental impacts. Underpinning a peace deal with unrestrained destruction of forests produces at best a highly problematic reduction in conflict. Replacing the drug trade with wildlife trafficking is equally not a good deal. Both can turn an unstable peace into unrestrained plunder.

• Policies addressing drug use should not become new forms of war. Mass incarceration of users and low-level, non-violent pushers does little to suppress—and can exacerbate—the use of illicit drugs. Stigmatizing and punishing users undermines efforts to stem the spread of HIV/AIDS and other communicable diseases. Public health approaches, such as needle-exchanges and safe-injection sites, produce far better policy outcomes and should be adopted.

Downloads

Authors

]]>
http://www.brookings.edu/research/papers/2015/10/south-korea-demographic-changes-moon?rssid=east+asia+policy+papers{2E281189-6B1F-4913-9C60-6C7B39BDDAE3}http://webfeeds.brookings.edu/~/150168373/0/brookingsrss/series/eastasiapolicypapers~South-Koreas-demographic-changes-and-their-political-impactSouth Korea's demographic changes and their political impact

South Korean society is in the throes of demographic and socio-political change, which will challenge the adaptability and resilience of its young democracy.

The growing influx of immigrants into the Republic of Korea (ROK) creates a unique opportunity for the South Korean society to deepen the meaning and practice of democracy through the social and political integration of these “New Koreans.” Although official recognition of these newcomers includes rights to citizenship under specific circumstances and substantial support for acculturation programs, discrimination by the larger society, economic insecurity, and sociocultural marginalization surround their daily lives. The ROK is in a transitional moment from what Anthony Smith describes as the “ethnic-genealogical” model of national identity to the “civic-territorial” model.[1]

This paper addresses the political implications of a South Korea that is increasingly constituted by ethnically different individuals from multiple countries who speak different languages and practice unfamiliar customs. It emphasizes that South Korean democracy, born of relative homogeneity in the late 20th century, will have to accommodate growing heterogeneity in the 21st century. Accommodation includes political representation of the New Koreans in government, elected office, civil society organizations, in addition to educational access and re-education of the Korean public regarding national identity and interests. The paper also discusses how demographic heterogeneity can change foreign relations as newcomers mediate economic, diplomatic, and people-to-people ties with their countries and cultures of origin. Additionally, the increasing presence of different and mixed ethnicities invites examination of the long-held basis of peninsular unification, namely, “pure bloodline,” and the exploration of an alternative civic and democratic rationale for unification to match the demographic dynamism.

Downloads

Authors

South Korean society is in the throes of demographic and socio-political change, which will challenge the adaptability and resilience of its young democracy.

The growing influx of immigrants into the Republic of Korea (ROK) creates a unique opportunity for the South Korean society to deepen the meaning and practice of democracy through the social and political integration of these “New Koreans.” Although official recognition of these newcomers includes rights to citizenship under specific circumstances and substantial support for acculturation programs, discrimination by the larger society, economic insecurity, and sociocultural marginalization surround their daily lives. The ROK is in a transitional moment from what Anthony Smith describes as the “ethnic-genealogical” model of national identity to the “civic-territorial” model.[1]

This paper addresses the political implications of a South Korea that is increasingly constituted by ethnically different individuals from multiple countries who speak different languages and practice unfamiliar customs. It emphasizes that South Korean democracy, born of relative homogeneity in the late 20th century, will have to accommodate growing heterogeneity in the 21st century. Accommodation includes political representation of the New Koreans in government, elected office, civil society organizations, in addition to educational access and re-education of the Korean public regarding national identity and interests. The paper also discusses how demographic heterogeneity can change foreign relations as newcomers mediate economic, diplomatic, and people-to-people ties with their countries and cultures of origin. Additionally, the increasing presence of different and mixed ethnicities invites examination of the long-held basis of peninsular unification, namely, “pure bloodline,” and the exploration of an alternative civic and democratic rationale for unification to match the demographic dynamism.

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Authors

]]>
http://www.brookings.edu/research/papers/2015/05/taiwan-south-china-sea-kuok?rssid=east+asia+policy+papers{A66FA373-F137-4EDE-9E6A-F4A62D9644CD}http://webfeeds.brookings.edu/~/150168377/0/brookingsrss/series/eastasiapolicypapers~Tides-of-change-Taiwans-evolving-position-in-the-South-China-SeaTides of change: Taiwan's evolving position in the South China Sea

Taiwan, along with China and four Southeast Asian countries, is a claimant in the South China Sea, though this fact is sometimes overlooked. On paper, Taiwan and China share the same claims. The dashed or U-shaped line encapsulating much of the South China Sea appears on both Taiwanese and Chinese maps.

Neither China nor Taiwan has officially clarified the meaning of the dashed line which could be seen as making a claim to the wide expanse of water enclosed within the dashed line or (merely) to the land features contained therein and to maritime zones made from them in accordance with the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and international law.

In the past year, Taiwan has taken small but significant steps toward clarifying that its claims are from land and in accord with UNCLOS and international law. It has also adopted a more conciliatory position by advocating that its East China Sea Peace Initiative, which calls on parties to shelve disputes and promote joint exploration and development in the East China Sea (where China, Taiwan and Japan have competing claims), be applied in the South China Sea as well.

These movements are significant in that they could have a stabilizing effect in the South China Sea. The People’s Republic of China (PRC) inherited its claims from the Republic of China (ROC) after the Chinese civil war. Thus, the ROC’s interpretation of its claims is relevant to the PRC’s claims. Notably, a more limited reading of the claims would not be inconsistent with China’s official position as set out in its 2009 and 2011 statements to the United Nations.

Taiwan’s overtures have largely, however, been ignored. At the root of this is China’s “one-China” principle, which has cast a long shadow over Taiwan. This paper argues that in order to carve out a modest political space for itself in the South China Sea, Taiwan should:

Clarify that its claims accord with UNCLOS and international law without expressly eschewing the dashed line.

Tread carefully on any public education on Taiwan’s claims in the South China Sea to avoid unleashing nationalist sentiment, which would limit policy options.

Continue promoting President Ma Ying-jeou’s plan for the East China Sea in the South China Sea.

Push behind the scenes for participation in code of conduct negotiations and in cooperative activities involving all claimants.

Provide evidence that Taiping Island is an “island” capable of sustaining human habitation or economic life under UNCLOS Article 121.

The paper also argues that all parties who have an interest in better management of the dispute and a more peaceful region—including China—have an interest in supporting Taiwan’s inclusion in negotiations and activities relating to the South China Sea. This can be done in ways consistent with China’s one-China principle. Proper management of the dispute necessarily involves Taiwan: Taiwan controls the largest land feature in the South China Sea, its vessels regularly patrol the area, and it has one of the biggest fishing industries in the Pacific.

For China, supporting Taiwan’s participation in cooperative activities would support both Beijing’s desire for better cross-strait relations, and its dual-track approach to the South China Sea dispute, which seeks one-on-one negotiations on sovereignty issues and multilateral arrangements within the region to promote peace and stability in the South China Sea.

The paper lays the foundation for these arguments by taking a closer look at calls within the United States for Taipei to “clarify” or “abandon” its dashed line; examining Taiwan’s claims in and evolving position on the South China Sea; and highlighting salient Chinese responses and the broader context within which Taiwan operates as a means by which to gauge the viability of various courses of action.

Authors

Taiwan, along with China and four Southeast Asian countries, is a claimant in the South China Sea, though this fact is sometimes overlooked. On paper, Taiwan and China share the same claims. The dashed or U-shaped line encapsulating much of the South China Sea appears on both Taiwanese and Chinese maps.

Neither China nor Taiwan has officially clarified the meaning of the dashed line which could be seen as making a claim to the wide expanse of water enclosed within the dashed line or (merely) to the land features contained therein and to maritime zones made from them in accordance with the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and international law.

In the past year, Taiwan has taken small but significant steps toward clarifying that its claims are from land and in accord with UNCLOS and international law. It has also adopted a more conciliatory position by advocating that its East China Sea Peace Initiative, which calls on parties to shelve disputes and promote joint exploration and development in the East China Sea (where China, Taiwan and Japan have competing claims), be applied in the South China Sea as well.

These movements are significant in that they could have a stabilizing effect in the South China Sea. The People’s Republic of China (PRC) inherited its claims from the Republic of China (ROC) after the Chinese civil war. Thus, the ROC’s interpretation of its claims is relevant to the PRC’s claims. Notably, a more limited reading of the claims would not be inconsistent with China’s official position as set out in its 2009 and 2011 statements to the United Nations.

Taiwan’s overtures have largely, however, been ignored. At the root of this is China’s “one-China” principle, which has cast a long shadow over Taiwan. This paper argues that in order to carve out a modest political space for itself in the South China Sea, Taiwan should:

Clarify that its claims accord with UNCLOS and international law without expressly eschewing the dashed line.

Tread carefully on any public education on Taiwan’s claims in the South China Sea to avoid unleashing nationalist sentiment, which would limit policy options.

Continue promoting President Ma Ying-jeou’s plan for the East China Sea in the South China Sea.

Push behind the scenes for participation in code of conduct negotiations and in cooperative activities involving all claimants.

Provide evidence that Taiping Island is an “island” capable of sustaining human habitation or economic life under UNCLOS Article 121.

The paper also argues that all parties who have an interest in better management of the dispute and a more peaceful region—including China—have an interest in supporting Taiwan’s inclusion in negotiations and activities relating to the South China Sea. This can be done in ways consistent with China’s one-China principle. Proper management of the dispute necessarily involves Taiwan: Taiwan controls the largest land feature in the South China Sea, its vessels regularly patrol the area, and it has one of the biggest fishing industries in the Pacific.

For China, supporting Taiwan’s participation in cooperative activities would support both Beijing’s desire for better cross-strait relations, and its dual-track approach to the South China Sea dispute, which seeks one-on-one negotiations on sovereignty issues and multilateral arrangements within the region to promote peace and stability in the South China Sea.

The paper lays the foundation for these arguments by taking a closer look at calls within the United States for Taipei to “clarify” or “abandon” its dashed line; examining Taiwan’s claims in and evolving position on the South China Sea; and highlighting salient Chinese responses and the broader context within which Taiwan operates as a means by which to gauge the viability of various courses of action.

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http://www.brookings.edu/research/papers/2014/12/south-china-sea-impasse-kuok?rssid=east+asia+policy+papers{24502701-2E75-4276-972A-C4035D06C4ED}http://webfeeds.brookings.edu/~/150168379/0/brookingsrss/series/eastasiapolicypapers~Overcoming-the-Impasse-in-the-South-China-Sea-Jointly-Defining-EEZ-ClaimsOvercoming the Impasse in the South China Sea: Jointly Defining EEZ Claims

The dispute involving China, Taiwan, and four Southeast Asian countries over territorial sovereignty and maritime rights in the South China Sea has been described as one of the world’s most complex and intractable international relations problems. Despite its regional and international ramifications, there is no clear roadmap for how it should be managed or resolved. The Philippines brought an arbitration claim against China, but the limited nature of the issues before the tribunal means that even if it decides that it has jurisdiction to hear the case, the award will not resolve issues of sovereignty or delimitation of any maritime boundaries. Other attempts to manage potential conflicts, namely, seeking a binding Code of Conduct, a moratorium or “freeze” on provocative activities, as well as greater cooperation between claimants, including joint development, have all foundered. Despite China’s recent indication that it is willing to reconsider the Code of Conduct and push for greater cooperation, significant hurdles lie ahead.

This paper argues that claimants should jointly define exclusive economic zone (EEZ) claims from the largest islands in the South China Sea on a “without prejudice” basis as a means to get around the current political and diplomatic impasse. It builds on an earlier proposal by Robert Beckman and Clive Schofield for China to define EEZ claims from the largest islands so that undisputed areas, which ASEAN claimants can develop unencumbered, as well as areas of overlapping claims, where joint development can take place, are clearly identified.

Defining EEZ claims from the largest islands is complementary to the other plans for conflict management since they all require agreement on the area over which they are to apply. The process required to jointly define claims could also foster the trust necessary for other cooperative arrangements and encourage claimants to limit provocative activities that are heightening tensions.

Adopting this proposal would require compromise and political will on the part of all claimants, where rising nationalism complicates matters. Yet, rolling back nationalism or at least reinterpreting what such sentiment should mean in the context of the South China Sea is possible. ASEAN claimants have a strong interest in accepting the proposal since they are increasingly losing leverage to China, particularly in light of recent reports of its large-scale land reclamation works in the Spratly Islands. Adopting the proposal is also in China’s interests not least because it helps the country achieve its strategic objectives in the region.

A joint initiative to clarify claims would involve the following broad steps:

Claimants explicitly stating that defining EEZ claims from the largest islands and any subsequent delimitation between overlapping EEZs is a “provisional arrangement of a practical nature” that will have no effect on the final determination of sovereignty claims or the delimitation of maritime boundaries.

Claimants together appointing a group of independent experts and agreeing on their terms of reference.

Independent experts coming to agreement on broad criteria for what constitutes an island capable of sustaining human habitation or economic life.

Experts agreeing on how to approach a land feature on which works have been carried out.

Independent experts determining the status of land features, their baselines and their maritime entitlements.

Claimants agreeing on whether delimitation in the case of overlapping EEZs should be the equidistance line or something that gives islands only partial effect.

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Authors

The dispute involving China, Taiwan, and four Southeast Asian countries over territorial sovereignty and maritime rights in the South China Sea has been described as one of the world’s most complex and intractable international relations problems. Despite its regional and international ramifications, there is no clear roadmap for how it should be managed or resolved. The Philippines brought an arbitration claim against China, but the limited nature of the issues before the tribunal means that even if it decides that it has jurisdiction to hear the case, the award will not resolve issues of sovereignty or delimitation of any maritime boundaries. Other attempts to manage potential conflicts, namely, seeking a binding Code of Conduct, a moratorium or “freeze” on provocative activities, as well as greater cooperation between claimants, including joint development, have all foundered. Despite China’s recent indication that it is willing to reconsider the Code of Conduct and push for greater cooperation, significant hurdles lie ahead.

This paper argues that claimants should jointly define exclusive economic zone (EEZ) claims from the largest islands in the South China Sea on a “without prejudice” basis as a means to get around the current political and diplomatic impasse. It builds on an earlier proposal by Robert Beckman and Clive Schofield for China to define EEZ claims from the largest islands so that undisputed areas, which ASEAN claimants can develop unencumbered, as well as areas of overlapping claims, where joint development can take place, are clearly identified.

Defining EEZ claims from the largest islands is complementary to the other plans for conflict management since they all require agreement on the area over which they are to apply. The process required to jointly define claims could also foster the trust necessary for other cooperative arrangements and encourage claimants to limit provocative activities that are heightening tensions.

Adopting this proposal would require compromise and political will on the part of all claimants, where rising nationalism complicates matters. Yet, rolling back nationalism or at least reinterpreting what such sentiment should mean in the context of the South China Sea is possible. ASEAN claimants have a strong interest in accepting the proposal since they are increasingly losing leverage to China, particularly in light of recent reports of its large-scale land reclamation works in the Spratly Islands. Adopting the proposal is also in China’s interests not least because it helps the country achieve its strategic objectives in the region.

A joint initiative to clarify claims would involve the following broad steps:

Claimants explicitly stating that defining EEZ claims from the largest islands and any subsequent delimitation between overlapping EEZs is a “provisional arrangement of a practical nature” that will have no effect on the final determination of sovereignty claims or the delimitation of maritime boundaries.

Claimants together appointing a group of independent experts and agreeing on their terms of reference.

Independent experts coming to agreement on broad criteria for what constitutes an island capable of sustaining human habitation or economic life.

Experts agreeing on how to approach a land feature on which works have been carried out.

Independent experts determining the status of land features, their baselines and their maritime entitlements.

Claimants agreeing on whether delimitation in the case of overlapping EEZs should be the equidistance line or something that gives islands only partial effect.

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Authors

]]>
http://www.brookings.edu/research/papers/2013/10/taiwan-transpacific-partnership-bush-meltzer?rssid=east+asia+policy+papers{B881EEC2-99D2-4B1C-99B9-ABFC9D4EAEF1}http://webfeeds.brookings.edu/~/150168385/0/brookingsrss/series/eastasiapolicypapers~Taiwan-and-the-TransPacific-Partnership-Preparing-the-WayTaiwan and the Trans-Pacific Partnership: Preparing the Way

Editor's Note: This East Asia Policy Paper was originally published in October 2013 as a working paper. Updates to the paper have since been made.

This paper provides an analysis of the benefits to Taiwan of membership in the Trans-Pacific Partnership (TPP), discusses why Taiwan’s membership is also important for current TPP members, and suggests steps that Taiwan and the United States can and should take to create an atmosphere conducive to Taiwan’s inclusion in TPP, should it decide to formally seek membership. In order for Taiwan (or any other country) to join the TPP an accession process will be required that is realistic and reflects the economic and strategic significance of the TPP, including the importance of growing the TPP to become a Free Trade Agreement of the Asia Pacific region. This paper discusses how Vietnam and Japan joined the TPP, what they needed to demonstrate in order to join and the economic and strategic calculations that underpinned U.S. support for these countries’ participation. The paper also overviews the outcomes being sought in the TPP negotiations in the areas of market access, rules and so-called cross-cutting issues and what types of reforms the TPP would require Taiwan to adopt should it join the TPP.

The Trans-Pacific Partnership

History

The TPP was built on the so-called Pacific-4 (P4) ― a free trade agreement (FTA) between New Zealand, Chile, Singapore and Brunei that came into effect in 2006. In 2008, the Bush Administration notified Congress of its intentions to join what became the TPP negotiations. Australia, Peru and Vietnam joined shortly thereafter, followed by Malaysia in October 2010. Canada and Mexico joined the TPP in June 2012 and Japan joined the TPP negotiations in July 2013.

The TPP parties are aiming to complete negotiations by the end of the year. At the October 2013 APEC meeting, leaders stated that they are on track to completing the TPP this year – though it is likely that the negotiations will be finalized in 2014.

Authors

Editor's Note: This East Asia Policy Paper was originally published in October 2013 as a working paper. Updates to the paper have since been made.

This paper provides an analysis of the benefits to Taiwan of membership in the Trans-Pacific Partnership (TPP), discusses why Taiwan’s membership is also important for current TPP members, and suggests steps that Taiwan and the United States can and should take to create an atmosphere conducive to Taiwan’s inclusion in TPP, should it decide to formally seek membership. In order for Taiwan (or any other country) to join the TPP an accession process will be required that is realistic and reflects the economic and strategic significance of the TPP, including the importance of growing the TPP to become a Free Trade Agreement of the Asia Pacific region. This paper discusses how Vietnam and Japan joined the TPP, what they needed to demonstrate in order to join and the economic and strategic calculations that underpinned U.S. support for these countries’ participation. The paper also overviews the outcomes being sought in the TPP negotiations in the areas of market access, rules and so-called cross-cutting issues and what types of reforms the TPP would require Taiwan to adopt should it join the TPP.

The Trans-Pacific Partnership

History

The TPP was built on the so-called Pacific-4 (P4) ― a free trade agreement (FTA) between New Zealand, Chile, Singapore and Brunei that came into effect in 2006. In 2008, the Bush Administration notified Congress of its intentions to join what became the TPP negotiations. Australia, Peru and Vietnam joined shortly thereafter, followed by Malaysia in October 2010. Canada and Mexico joined the TPP in June 2012 and Japan joined the TPP negotiations in July 2013.

The TPP parties are aiming to complete negotiations by the end of the year. At the October 2013 APEC meeting, leaders stated that they are on track to completing the TPP this year – though it is likely that the negotiations will be finalized in 2014.

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Authors

]]>
http://www.brookings.edu/research/papers/2013/09/30-taiwan-trans-pacific-partnership-meltzer?rssid=east+asia+policy+papers{50AB44BF-F1BE-4983-8727-D5F48E0E7252}http://webfeeds.brookings.edu/~/150168387/0/brookingsrss/series/eastasiapolicypapers~Taiwans-Economic-Opportunities-and-Challenges-and-the-Importance-of-the-TransPacific-PartnershipTaiwan's Economic Opportunities and Challenges and the Importance of the Trans-Pacific Partnership

Editor's Note: This East Asia Policy Paper was originally published in September 2013 as a working paper. Updates to the paper have since been made.

Introduction

The following Working Paper provides an overview of Taiwan’s economic structure and the trading relations which have underpinned the globalization of its economy. The Working Paper outlines Taiwan’s economic challenges and analyzes the economic costs for Taiwan of not participating in the growth of regional Free Trade Agreements (FTAs). The Paper discusses why it is important for Taiwan to participate in these FTAs - and in particular the Trans-Pacific Partnership (TPP) - both as a means of retaining competitiveness in its key export markets and perhaps more importantly, as an external driver of domestic economic reform.

Taiwan’s Economy

Taiwan is an economic success. Since 1992, Taiwan’s GDP growth has averaged 4.5 percent. This raised real per capita income from $9,116 in 1992 to $19,762 in 2012, with the result that today Taiwan is the 28th wealthiest country globally, and 6th richest country in Asia. And along the way Taiwan has transformed itself from a dictatorship into a vibrant democracy.[1]

Fuelling this growth in Taiwan has been a rapid expansion in international trade. In 1992, Taiwan’s total trade was over $180 billion and represented 82 percent of GDP. In 2012, Taiwan’s trade represented 140 percent of GDP and was valued at over $650 billion, making it the world’s 19th largest trader even though it is only the 28th largest economy in the world.

Of Taiwan’s goods exports in 2012, approximately 99 percent were from the industrial sector, while agriculture goods comprised around 1 percent of exports. In terms of imports, over 77 percent of Taiwan imports are of agricultural goods and raw material, reflecting Taiwan’s limited arable land and lack of indigenous natural resources. Capital goods are the next largest imports (14 percent), followed by consumer goods (approximately 10 percent).

As these figures demonstrate, Taiwan’s economy is highly dependent on international trade. In fact, from 2005-2012 net exports was the most important driver of growth in Taiwan. Taiwan’s economy focuses on producing parts and components that are incorporated into final products, often sold by companies from Japan, the United States, or European Union.[2] In fact, over 70 percent of Taiwan’s exports comprise intermediate goods. This so-called contract manufacturing has been especially focused in the information and communications technology (ICT) sector. Taiwan produces 94 percent of the world’s motherboards and notebook PCs. And the Taiwan Semiconductor Manufacturing Company produces most of the computer chips used by U.S. companies such Qualcomm and Nvidia. That said, Taiwan also has some global brand names such as Acer and Asus for PCs, and companies such as Quanta and Wistron are original design manufacturers for most global PC brands.[3] Additionally, Taiwan businesses rely heavily on overseas production networks to make goods for export. This varies by sector, but in areas such as ICT, up to 85 percent of Taiwan’s exports are made outside Taiwan.[4]

Taiwan’s Trade and Investment Relations

Over the last twenty years, Taiwan’s changing international trade and investment patterns have been characterized by growing economic interdependence with China in particular, but also East Asia more broadly. For instance, in 1992 China was Taiwan’s 26th most important trading partner with $748 million in total trade (158th export destination and 20th largest import source).[5]

By 2002 total trade with China was worth $18.5 billion, making it Taiwan’s 4th largest trading partner. In 2012, total trade with China was valued at over $121.5 billion (exports to China of $80.7bn and imports of $40.9bn). China is now Taiwan’s most important trading partner – Taiwan’s largest export destination and second largest source of imports - representing over 21 percent of total trade (40 percent of trade including Hong Kong), up from 7 percent in 2002.[6]

Investment in China has also grown substantially over this period and accumulated Taiwan investment in China was valued at over US$58 billion as of July 2013.[7] Most of the investment is in the manufacturing sector such as electronic parts and components (20 percent) and computer electronics and optical manufacturing (14 percent). Investment in China now represents approximately 80 percent of total Taiwanese FDI.

This investment in China has integrated China into the supply chains of Taiwanese businesses. It has also underpinned the movement of goods between and within Taiwan businesses located in China and Taiwan. As a result, the main categories of Taiwan-China trade are in the same sectors where Taiwanese investment in China is located. For instance, Taiwan’s main exports and imports from Chinas are of electrical machinery and equipment (41 percent/42.5 percent) and optical and photographic instruments (15.2 percent/15.5 percent).[8]

A similar story is true for Taiwan’s trade with ASEAN countries which saw an increase in total trade from $33bn in 2002 to $88bn in 2012. Approved foreign investments in and out of Taiwan with ASEAN’s major economies (Indonesia, Malaysia, Philippines, Thailand and Vietnam) also saw a significant increase from $503 million in 2002 to $6bn in 2012. This reflects the integration by Taiwan business of ASEAN into regional supply chains. Some countries such as Vietnam are a source of low cost manufacturing, while in other ASEAN countries such as the Philippines and Malaysia Taiwan companies produce more advanced intermediate goods in the telecoms and IT sectors. Moreover, these goods are then often exported to China for further processing into final goods.[9]

During this period of growing trade with East Asia, Taiwan’s trade relations with the United States have become less significant. For instance, in 1992 the U.S.-Taiwan trade relationship was worth almost $40bn, making the United States Taiwan’s number one trading partner representing over 25 percent of Taiwan’s total trade. By 2002, total trade had increased a little over 12 percent to $45.5bn (compared with an increase in Taiwan-China trade during this period of almost 2500 percent) and by 2012 the United States was Taiwan’s third largest trading partner with total trade worth $56.5bn, representing less than 10 percent of Taiwan trade.[10]

Authors

Editor's Note: This East Asia Policy Paper was originally published in September 2013 as a working paper. Updates to the paper have since been made.

Introduction

The following Working Paper provides an overview of Taiwan’s economic structure and the trading relations which have underpinned the globalization of its economy. The Working Paper outlines Taiwan’s economic challenges and analyzes the economic costs for Taiwan of not participating in the growth of regional Free Trade Agreements (FTAs). The Paper discusses why it is important for Taiwan to participate in these FTAs - and in particular the Trans-Pacific Partnership (TPP) - both as a means of retaining competitiveness in its key export markets and perhaps more importantly, as an external driver of domestic economic reform.

Taiwan’s Economy

Taiwan is an economic success. Since 1992, Taiwan’s GDP growth has averaged 4.5 percent. This raised real per capita income from $9,116 in 1992 to $19,762 in 2012, with the result that today Taiwan is the 28th wealthiest country globally, and 6th richest country in Asia. And along the way Taiwan has transformed itself from a dictatorship into a vibrant democracy.[1]

Fuelling this growth in Taiwan has been a rapid expansion in international trade. In 1992, Taiwan’s total trade was over $180 billion and represented 82 percent of GDP. In 2012, Taiwan’s trade represented 140 percent of GDP and was valued at over $650 billion, making it the world’s 19th largest trader even though it is only the 28th largest economy in the world.

Of Taiwan’s goods exports in 2012, approximately 99 percent were from the industrial sector, while agriculture goods comprised around 1 percent of exports. In terms of imports, over 77 percent of Taiwan imports are of agricultural goods and raw material, reflecting Taiwan’s limited arable land and lack of indigenous natural resources. Capital goods are the next largest imports (14 percent), followed by consumer goods (approximately 10 percent).

As these figures demonstrate, Taiwan’s economy is highly dependent on international trade. In fact, from 2005-2012 net exports was the most important driver of growth in Taiwan. Taiwan’s economy focuses on producing parts and components that are incorporated into final products, often sold by companies from Japan, the United States, or European Union.[2] In fact, over 70 percent of Taiwan’s exports comprise intermediate goods. This so-called contract manufacturing has been especially focused in the information and communications technology (ICT) sector. Taiwan produces 94 percent of the world’s motherboards and notebook PCs. And the Taiwan Semiconductor Manufacturing Company produces most of the computer chips used by U.S. companies such Qualcomm and Nvidia. That said, Taiwan also has some global brand names such as Acer and Asus for PCs, and companies such as Quanta and Wistron are original design manufacturers for most global PC brands.[3] Additionally, Taiwan businesses rely heavily on overseas production networks to make goods for export. This varies by sector, but in areas such as ICT, up to 85 percent of Taiwan’s exports are made outside Taiwan.[4]

Taiwan’s Trade and Investment Relations

Over the last twenty years, Taiwan’s changing international trade and investment patterns have been characterized by growing economic interdependence with China in particular, but also East Asia more broadly. For instance, in 1992 China was Taiwan’s 26th most important trading partner with $748 million in total trade (158th export destination and 20th largest import source).[5]

By 2002 total trade with China was worth $18.5 billion, making it Taiwan’s 4th largest trading partner. In 2012, total trade with China was valued at over $121.5 billion (exports to China of $80.7bn and imports of $40.9bn). China is now Taiwan’s most important trading partner – Taiwan’s largest export destination and second largest source of imports - representing over 21 percent of total trade (40 percent of trade including Hong Kong), up from 7 percent in 2002.[6]

Investment in China has also grown substantially over this period and accumulated Taiwan investment in China was valued at over US$58 billion as of July 2013.[7] Most of the investment is in the manufacturing sector such as electronic parts and components (20 percent) and computer electronics and optical manufacturing (14 percent). Investment in China now represents approximately 80 percent of total Taiwanese FDI.

This investment in China has integrated China into the supply chains of Taiwanese businesses. It has also underpinned the movement of goods between and within Taiwan businesses located in China and Taiwan. As a result, the main categories of Taiwan-China trade are in the same sectors where Taiwanese investment in China is located. For instance, Taiwan’s main exports and imports from Chinas are of electrical machinery and equipment (41 percent/42.5 percent) and optical and photographic instruments (15.2 percent/15.5 percent).[8]

A similar story is true for Taiwan’s trade with ASEAN countries which saw an increase in total trade from $33bn in 2002 to $88bn in 2012. Approved foreign investments in and out of Taiwan with ASEAN’s major economies (Indonesia, Malaysia, Philippines, Thailand and Vietnam) also saw a significant increase from $503 million in 2002 to $6bn in 2012. This reflects the integration by Taiwan business of ASEAN into regional supply chains. Some countries such as Vietnam are a source of low cost manufacturing, while in other ASEAN countries such as the Philippines and Malaysia Taiwan companies produce more advanced intermediate goods in the telecoms and IT sectors. Moreover, these goods are then often exported to China for further processing into final goods.[9]

During this period of growing trade with East Asia, Taiwan’s trade relations with the United States have become less significant. For instance, in 1992 the U.S.-Taiwan trade relationship was worth almost $40bn, making the United States Taiwan’s number one trading partner representing over 25 percent of Taiwan’s total trade. By 2002, total trade had increased a little over 12 percent to $45.5bn (compared with an increase in Taiwan-China trade during this period of almost 2500 percent) and by 2012 the United States was Taiwan’s third largest trading partner with total trade worth $56.5bn, representing less than 10 percent of Taiwan trade.[10]

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http://www.brookings.edu/research/papers/2013/10/03-taiwan-trans-pacific-partnership-bush?rssid=east+asia+policy+papers{201433B8-D54C-4AB6-883B-374A17401A7A}http://webfeeds.brookings.edu/~/150168391/0/brookingsrss/series/eastasiapolicypapers~Taiwan-and-the-TransPacific-Partnership-The-Political-DimensionTaiwan and the Trans-Pacific Partnership: The Political Dimension

Editor's Note: This inaugural East Asia Policy Paper was originally published in October 2013 as a working paper. Updates to the paper have since been made.

The task seems insurmountable. The various obstacles to Taiwan’s becoming a member of the Trans-Pacific Partnership are indeed daunting. The disciplines that TPP imposes are demanding. Resistance to them from domestic interests is certain. And then there is China, which opposes the idea of Taiwan acting independently in the international system. Some might say that for Taiwan to make a play for TPP and lose because of Chinese obstruction is worse than not trying at all. That is, even if the rewards of being a member of the TPP club―perhaps the most exclusive in the global economy―are clear, the costs of even trying to join seem excessive. If Las Vegas or Macau bookmakers took bets on the chances of TPP success for Taiwan, they would surely be very long.

How to shorten these odds? Consider the metaphor of a safe with a combination lock. Essentially, the locking mechanism of this kind of safe is made up of a set of wheels called a “wheel pack.” The combination dial sequentially engages the wheels with a series of turns in alternating directions and of varying numbers of times around the dial. If each turn has been done correctly, the wheels line up in a way that disables the lock and allows safe to open. But the turns have to be precisely accurate, with the right number of turns around the dial and to the exact final point. Any small mistakes and the whole process must begin again. This is the challenge that Taiwan faces, but the number of steps it must successfully accomplish is greater than the number of wheels in the standard combination safe. It must take these steps in the correct order, for it will be their cumulative effect that opens the door to TPP membership. Finally, Taipei is not always in total control of its destiny. For some “wheels” it is others, not Taiwan, who are “spinning the dial.” Taipei is dependent on the decisions of these others but has no say in them.

So what are the “wheels” that must align for Taiwan to open the locked safe of TPP membership? The following are the steps that I believe must occur, listed in what seems to be the proper sequence. Obviously, removing Chinese political opposition is one of those wheels but it is not the only one, nor is it the first one. None of these steps is easy, and some are not under Taiwan’s control, either wholly or partially. But if these steps occur and occur in the proper order, the odds of Taiwan’s membership become less daunting.

Step One: The twelve countries that are party to the current TPP negotiations must complete an agreement.

At least rhetorically, the countries currently participating in the TPP negotiations believe they are addressing issues that are key to a healthy international economy in the twenty-first century. They appear to be negotiating seriously to reach a mutually acceptable outcome. But it is conceivable that finding solutions to these problems may simply be too ambitious. If the twelve countries are not able to reach consensus on new rules, then Taiwan will not have a TPP option. Let us assume, however, that the twelve current countries will reach a TPP agreement and that Taipei can plan for the best, even as it prepares for the worst.

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Editor's Note: This inaugural East Asia Policy Paper was originally published in October 2013 as a working paper. Updates to the paper have since been made.

The task seems insurmountable. The various obstacles to Taiwan’s becoming a member of the Trans-Pacific Partnership are indeed daunting. The disciplines that TPP imposes are demanding. Resistance to them from domestic interests is certain. And then there is China, which opposes the idea of Taiwan acting independently in the international system. Some might say that for Taiwan to make a play for TPP and lose because of Chinese obstruction is worse than not trying at all. That is, even if the rewards of being a member of the TPP club―perhaps the most exclusive in the global economy―are clear, the costs of even trying to join seem excessive. If Las Vegas or Macau bookmakers took bets on the chances of TPP success for Taiwan, they would surely be very long.

How to shorten these odds? Consider the metaphor of a safe with a combination lock. Essentially, the locking mechanism of this kind of safe is made up of a set of wheels called a “wheel pack.” The combination dial sequentially engages the wheels with a series of turns in alternating directions and of varying numbers of times around the dial. If each turn has been done correctly, the wheels line up in a way that disables the lock and allows safe to open. But the turns have to be precisely accurate, with the right number of turns around the dial and to the exact final point. Any small mistakes and the whole process must begin again. This is the challenge that Taiwan faces, but the number of steps it must successfully accomplish is greater than the number of wheels in the standard combination safe. It must take these steps in the correct order, for it will be their cumulative effect that opens the door to TPP membership. Finally, Taipei is not always in total control of its destiny. For some “wheels” it is others, not Taiwan, who are “spinning the dial.” Taipei is dependent on the decisions of these others but has no say in them.

So what are the “wheels” that must align for Taiwan to open the locked safe of TPP membership? The following are the steps that I believe must occur, listed in what seems to be the proper sequence. Obviously, removing Chinese political opposition is one of those wheels but it is not the only one, nor is it the first one. None of these steps is easy, and some are not under Taiwan’s control, either wholly or partially. But if these steps occur and occur in the proper order, the odds of Taiwan’s membership become less daunting.

Step One: The twelve countries that are party to the current TPP negotiations must complete an agreement.

At least rhetorically, the countries currently participating in the TPP negotiations believe they are addressing issues that are key to a healthy international economy in the twenty-first century. They appear to be negotiating seriously to reach a mutually acceptable outcome. But it is conceivable that finding solutions to these problems may simply be too ambitious. If the twelve countries are not able to reach consensus on new rules, then Taiwan will not have a TPP option. Let us assume, however, that the twelve current countries will reach a TPP agreement and that Taipei can plan for the best, even as it prepares for the worst.